BSNL rings in VRS offer of upto Rs 20 lakh per employee

KOLKATA: State-owned telecom operator Bharat Sanchar Nigam (BSNL) is ready to pay up to Rs 20 lakh per employee as part of its proposed voluntary retirement scheme designed to revive the loss-making company. This is the first time the telco has spelt out the details of the VRS which has been under discussion for the past two years.

A top company executive told ET that all BSNL employees above the age of 45 will be eligible for the VRS. The company has set an internal target of 99,700 employees - comprising Group A (1,483), Group B (6,262), Group C (76,655) and Group D (15,214) staffers.

If the employee unions endorse the scheme, BSNL will look to outsource key functions like transmission and switching system installation, training, civil engineering and architectural work. "The objective is to emulate the outsourcing models of some world-class operators like Deutsche Telekom, British Tele-com and Telstra," said a BSNL executive familiar with the discussions.

The BSNL board is slated to finalise the scheme at its meeting on September 29. An official privy to the discussions said the company is in talks with all major unions which are yet to communicate their views. The official added that the proposal will shortly go to the Union Cabinet after it is cleared by the telecom department.

As per a draft copy of the proposal viewed by ET, BSNL proposes to offer compensation equivalent to 35 days' salary (pay + dearness allowance) for each completed year of service and 25 days' salary for the residual service period till superannuation. This works out to a compensation ranging between Rs 13 lakh and Rs 20 lakh per employee.

A section of BSNL unions are, however, far from happy with the proposal. "BSNL's offer is not as generous as MTNL's which offered an ex-gratia amount of 60 days salary (basic + DA) for each completed year of service," said a spokesman of Sanchar Nigam Executives Association, which represents BSNL officers.

However, former Coal India chief Partha Bhattacharyya, who orchestrated several VRS exercises during his stint as chairman, feels the BSNL offer is pretty fair. "I would think BSNL's offer is better than what Coal India offered when it implemented VRS at its subsidiaries - Eastern Coalfields and Bharat Coking Coal," said Bhattacharyya, who is now managing director of Haldia Petrochemicals. Coal India had offered to give either 45 days' pay for each completed year of service or the same for the residual service period, whichever was lower. "The BSNL offer appears to be better since it offering compensation for both completed years of service and residual period until superannuation," he said.

The VRS has been under discussion since 2009 when a panel headed by Sam Pitroda, advisor to the prime minister on public information infrastructure and innovations, advocated that BSNL take the VRS route to prune its nearly 2.77 lakh strong workforce by a third. The proposed VRS aims to prune BSNL's annual salary bill which, at 13,791 crore, works out to a hefty 46.5% of its total income.

BSNL's liability for the proposed VRS is pegged at a modest Rs 2,705 crore, while the telecom department will shoulder nearly Rs 15,476 crore. It remains to be seen whether BSNL has the cash reserves to fund its portion of the VRS bill, given its continuing run of losses and the fact that it has to shell out a staggering Rs 18,000-odd crore to pay for 3G and broadband wireless airwaves.